How extreme wealth is changing around the world(Read article summary)
The United States still boasts the most billionaires in the world by a wide margin, but other countries are gaining ground.
Q: Where do the world’s wealthiest citizens come from?
A: According to Forbes, there were 1,826 billionaires across the globe in 2015, controlling approximately $7.05 trillion. By far, the world’s billionaire population is most heavily concentrated in the United States, which boasts 30.2 percent of the total (about 551).
Developed areas such as the US and Europe have long controlled the bulk of the world’s wealth. However, extreme wealth in developing economies has grown rapidly in the past two decades. China, for instance, is now home to 9.2 percent of the world’s billionaires. Economists Caroline Freund and Sarah Oliver analyzed 20 years of Forbes data to provide a snapshot of wealth around the world in their 2016 report, “The Origins of the Superrich: The Billionaire Characteristics Database.”
Where did their money come from?
Ms. Freund and Ms. Oliver divide the world’s wealthy into five types: people who inherited their money; company founders; company executives; those with political connections, control of natural resources, or both; and those in the financial sector.
What does this say about the world?
The kind of wealth varies from region to region. In Russia, it’s dominated by political connections and resources (Russia is rich in natural resources including oil). In many European countries, inherited wealth is still the norm, as it was in most of the world for centuries. But in recent decades, wealth has been “increasingly self-made, even in the advanced countries,” according to Freund and Oliver. In the US, company founders make up the largest group of billionaires (nearly a third).
That’s even truer in emerging markets. Virtually all of China’s billionaires are self-made, largely because there wasn’t any wealth to inherit in that region just a few decades ago.
This is a good thing in terms of inequality, right?
Yes and no. On one hand, there’s more mobility at the upper reaches of the wealth scale than ever before.
“The relatively rapid growth in the number of self-made billionaires and their wealth alleviates some concerns raised by the economist Thomas Piketty about ... fortunes [becoming] more concentrated over time if capital remained in the same hands,” the report reads. “In fact, extreme wealth is created and destroyed at a nearly constant rate in the United States....”
On the other hand, economic growth globally, and in specific countries, has been achieved almost entirely by wealth gains at the top – not an improvement for everyone.
“In all regions ... growth in the total real net worth in these countries is driven by additions of new superrich to the list rather than growth of existing fortunes,” Freund and Oliver write.